Producer price inflation eased last month. The finished goods
PPI fell 0.6% after its strong 1.4% increase during January.
Nevertheless, the 4.6% y/y gain remained nearly the strongest since the
autumn of 2008. The February decline exceeded Consensus expectations
for a 0.2% dip.

Lower energy prices were behind the decline in the PPI. Their
2.9% drop reversed some of the 5.1% January increase but left energy
prices 17.7% higher than last year. A 7.4% decline (+48.7% y/y) in
gasoline prices led the weakness and reversed most of the 11.5% January
gain. Home heating oil prices also fell sharply. However, their 5.6%
decline (+29.3% y/y) still left the annual gain at its strongest since
the fall of 2008. Finally, natural gas prices rose a modest 0.8% (-8.0%
y/y) and electricity prices rose 0.4% (-1.0% y/y).

Finished food prices repeated their 0.4% January increase.
Their resulting 3.4% y/y increase was the strongest since December
2008. Severe weather caused a one-third y/y increase in prices for
fresh fruits while egg prices (16.5% y/y) and pork prices (14.1% y/y)
have been similarly firm. These strong gains have been offset by weak
beef prices and declines in bakery, rice and pasta product prices.

Prices for intermediate goods rose just 0.1% reflecting a 2.7%
decline (+19.6% y/y) in energy and a 0.4% decline (+2.3% y/y) in food.
The increase in core prices, however, moved higher to 0.9% and the 2.8%
y/y increase was the strongest since December 2008. The crude materials
PPI fell 3.5% due to a 6.4% decline (+49.8% y/y) in energy prices. Core
crude prices were led modestly lower due to a 7.4% decline (+59.7% y/y)
in aluminum prices. Versus last year copper prices also have been
strong and doubled while iron & steel scrap prices have risen
by two-thirds.

The producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.